Citigroup posts $5.1 billion loss on write-downs

18-04-2008

Citigroup posts $5.1 billion loss on write-downs
Citigroup has posted a worse-than-expected first quarter loss of $5.1 billion (£2.56 billion) after massive write-downs totalling $15.1 billion (£7.58 billion).

America's biggest bank was expected to post a loss of $4.75 billion (£2.38 billion), according to a survey compiled by Bloomberg.

Citigroup's revenue plunged 48 per cent to $13.2 billion (£6.6 billion), mainly on subprime-related write-downs, but also on written-off loans and credit cards.

Job fears rose on the news as Citigroup's chief executive Vikram Pandit has already warned the bank may slash 20 per cent of its workforce in a bid to cut costs.

Mr Pandit said: "During the first quarter, valuations of our subprime related exposures in fixed income markets and leveraged finance assets have further declined and credit costs in our consumer lending businesses have increased.

"We have taken decisive and significant actions to strengthen our balance sheet, including over $30 billion (£15 billion) of capital raised during December and January, a significant increase in our credit reserves, the sale of Redecard shares, the recently announced divestitures of CitiCapital and Diners Club International, and the realignment of and pending asset reductions in our mortgage business," Mr Pandit added.

Double-digit revenue growth in Asia, Latin America and Japan was offset by revenue declines in the US and Europe, the bank said. The net interest margin increased 30 basis points versus the fourth quarter 2007.

JP Morgan Chase reported a first quarter profit earlier in the week, although it was halved from last year, while Merrill Lynch reported a first-quarter loss of $2.14 billion (£1.07 billion) yesterday.

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